There is a growing consensus that global economic growth will slowly recover in 2020, particularly in the second half of the year. We made this prediction nearly four months ago in Central banks to the rescue…with a lag (27 August 2019), pointing to the positive, lagged impact of central bank rate cuts on global GDP growth. Since May, the global
Read moreSterling has appreciated 1.5% in Nominal Effective Exchange Rate terms since 26th November to a 7-month high, a notable move in a world of depressed currency volatility. Markets have seemingly taken comfort from the (modest) widening of the gap between the ruling Conservative Party and opposition Labour party in opinion polls to about 10pp and YouGov predicting that Prime Minister
Read moreThis report updates the monthly seasonal patterns of 32 major Nominal Effective Exchange Rates (NEERs) going back to May 2010, using over 90,000 daily data points with trade-weights derived from the BIS (April 2019) and national central banks (see Nominal Effective Exchange Rates: Monthly seasonal patterns, 10 January 2019). A number of factors can drive currency seasonality, including underlying seasonal
Read moreGlobal FX volatility has fallen further in the past month to its lowest level since September 2014 according to our estimate (see Figure 1). Volatility in most major currencies has either fallen or only increased marginally in the past month and is now very low relative to the past 12 months. Sterling, the Brazilian Real and Turkish Lira have recorded
Read moreWe noted in “Renminbi depreciation true to form” (6 June 2019) that history was repeating itself, with the Renminbi NEER having weakened in April-June as it had done in May-July 2018, albeit at a more modest pace (see figure 1). This was a clear indication in our view that “Chinese policy-makers were once again using Renminbi depreciation as both a
Read moreThe Korean Won Nominal Effective Exchange Rate has appreciated 4.7% since the 41-month low recorded on 12th August to a six-month high, with the Won up against the currencies of Korea’s largest trading partners, namely the Yen, Euro, Renminbi and Dollar. A common view is that, with China accounting for about a third of Korea’s total trade, day-to-day speculative flows
Read moreIn US Consumer – From King to Prince (8 October 2019), we argued that “the recent fall in US consumer confidence, slowdown in income and wage growth and jitters in US equity markets suggest that Personal Consumption Expenditure (PCE) growth remained weak in September and thus slowed materially in Q3” (September data are due on 31st October). Weak September retail
Read moreIt is perhaps obvious that Personal Consumption Expenditure (PCE) – or consumer demand – is critical to US economic growth. PCE growth has accounted for over 80% of US real GDP growth since end-2013 (see Figure 7), thanks to its relative size (nearly 70% of GDP) and the fact that PCE is the only demand sub-component which has positively contributed
Read moreCentral banks across the world have been cutting their policy rates in unison since early May, in line with our forecast back in January that “policy rate cuts, which have all but disappeared since last Spring, may yet resurface in the second half of 2019 (see Forecast Update: Brexit, FX, central banks & GDP growth, 18 January 2019). Our measure
Read moreNot a day passes without the media and US President Trump pointing the finger at “currency wars” and “competitive devaluations”. The thrust of the argument is that central banks across the world, in a “race to the bottom”, are cutting policy rates and in the case of the ECB resuming QE, in order to weaken their currencies and boost export
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